The Possible Legal Issue with MLB’s Cuba Deal

The incredible dangers faced by baseball players attempting to defect from Cuba in order to play professional baseball in the United States are by now well-documented. Yasiel Puig had to buy his freedom from smugglers. Yoenis Cespedes and his family were “abandoned for two days on a strip of sand more than 600 miles southeast of Florida.” Jose Abreu had to leave his son behind. Alexei Ramirez, Jose Iglesias, Aroldis Chapman, Yulieski Gurriel – all faced unspeakable hardships escaping from Cuba, often using smugglers or human traffickers, and risking kidnapping or worse. The situation led to a federal grand jury investigation into baseball’s links to human trafficking, particularly as it concerned the Dodgers.

Last week, MLB finally took action, reaching a deal with the MLBPA and the Cuban government that aims to end human trafficking by allowing Cuban players to access a posting system.

Major League Baseball, its players’ association and the Cuban Baseball Federation reached an agreement that will allow players from the island to sign big league contracts without defecting, an effort to eliminate the dangerous trafficking that had gone on for decades.

The agreement, which runs through Oct. 31, 2021, allows Cubans to sign under rules similar to those for players under contract to clubs in Japan, South Korea and Taiwan.

There will be further analysis in the coming weeks of the baseball implications of such an agreement. For our purposes, though, I’d like to focus on one aspect of the deal in particular that might prove problematic.

MLB teams will need to pay the FCB [the Cuban Baseball Federation, Cuba’s baseball authority] for the contractual release of players who are 24 years old or younger and who have five or fewer years of service. The fee will reflect 25% of the signing bonus. It will be up to the FCB to decide whether to release such a player. In contrast, MLB teams will be able to sign Cuban players who are 25 or older and who have at least six years of experience in FCB without the consent of the FCB (MLB teams will, however, need to pay the FCB 15% to 20% of the total value of those players’ contracts).

On the surface, this seems similar to the posting agreements negotiated with Japan and South Korea’s professional leagues. There’s just one problem: the FCB is an arm of the Cuban government, and has even been run by Fidel Castro’s son, who served as its vice president. This agreement means that MLB, an American business entity, would be paying money to an unofficial arm of the Cuban government. Because of the United States’ trade embargo, which remains in effect, it’s questionable at best whether this arrangement will survive legal scrutiny.

As to the embargo, it is not one law but rather a catchall moniker for various statutes, executive orders, regulations and other proclamations that are designed to prevent or impede economic relations between the two nations. It began largely through executive orders issued by President John F. Kennedy and years later would become codified into statutes, including the Cuban Democracy Act of 1992 and the Cuban Liberty and Democratic Solidarity Act of 1996. Numerous regulations promulgated by the U.S. Treasury Department and the U.S. Commerce Department have also clarified and altered the scope of the embargo. The larger point is that despite the warming of diplomatic and economic relations between the U.S. and Cuba, the embargo remains in effect.

Dan Halem, MLB’s chief legal officer, told Reuters that the Obama Administration signed off on a deal of this type before it was finalized, due mostly to the fact that the FCB isn’t officially a government agency. And in 2016, the Office of Foreign Assets Control (OFAC), which is responsible for implementing and overseeing the Cuba embargo, did grant MLB a license to explore a deal with Cuba.

But the Trump Administration has taken a different view, with the State Department telling NPR that, despite the agreement, nothing has changed: “baseball players will still have to go to another country to apply for a work visa, in accordance with U.S. policy.” The White House has signaled that it isn’t likely to approve the deal for the same reason, as the New York Times reported.

On Wednesday, a White House statement criticized baseball’s agreement with Cuba, saying the administration would continue to restrict Cuba’s ability to profit from American businesses.

The Office of Foreign Assets Control could revoke M.L.B.’s license to negotiate with the Cubans. If it does, it would signal a shift in policy that could affect many other companies doing business in Cuba.

And prominent members of Congress agree.

I have asked state dept & White House to review the deal that allows Cuban regime to conduct state sponsored trafficking of baseball players.

Unlike Japan & Mexico the regime controls sports & the state department should issue a ruling to that effect. https://t.co/Ismcgr4P7o

— Marco Rubio (@marcorubio) December 20, 2018

Shameful that @MLB would consider joining with the Cuban regime to exploit Cuban baseball players. It would be unconscionable for an American organization to participate in human trafficking which enriches the very regime that oppresses the Cuban people.

— Mario Diaz-Balart (@MarioDB) December 19, 2018

So as of now, it seems likely that OFAC will scuttle the deal by revoking MLB’s license, arguing that payments directly to an unofficial arm of the Cuban government violate the embargo.

Some, like Sports Illustrated’s Michael McCann, have argued that MLB would have a legal remedy should that happen. The problem is that the “arbitrary and capricious” standard referenced by McCann in his piece typically applies more to domestic administrative proceedings, not foreign ones. And the reality is that the executive branch is given wide latitude to implement and enforce economic sanctions. As Alexander Cohen and Joseph Ravitch bluntly – and correctly – wrote for the Yale Journal of International Law,

The President’s constitutional and statutory authority includes the power to impose virtually any type of economic sanction. Thus, any challenge to an economic sanctions program on the grounds that the President is acting beyond his authority will fail.

So, to me, if the administration decides to scuttle the deal on the grounds of national security – i.e., that it violates the embargo – there likely isn’t much MLB can do about it. Certainly the league could seek a legal remedy, but its chances of obtaining one from a court are quite slim. It seems more likely that, if this deal is to be approved, it will require either a change of administration, or a change of heart by the present one.